I think this analysis is generally correct, but we already saw it happen during Covid, and prices in cities didn't really drop during that time, they just flatt

I think this analysis is generally correct, but we already saw it happen during Covid, and prices in cities didn't really drop during that time, they just flattened. There seems to be an equilibrium in which landlords are preferring to hold out and leave units vacant for a little longer, knowing that they will make more money in the long run if prices don't drop. this has been ongoing in commercial real estate for a long time, so it's not surprising that the same would happen in residential.